Wren Company Accepted a Check from Jay Company as Payment

question 60

Multiple Choice

Wren Company accepted a check from Jay Company as payment for services rendered.Wren's bank statement revealed that the Jay check was an NSF check.What effect will the entry to record the NSF check have on the accounting equation of Wren Company?

• A) Choice A
• B) Choice B
• C) Choice C
• D) Choice D

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Definitions:

Cash Break-Even

The amount of revenue necessary to cover all cash operating expenses, ignoring non-cash costs.

Fixed Costs

Expenses that do not change with changes in the volume of production or sales, such as rent, salaries, and insurance.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the percentage of fixed costs in a company's cost structure.

Financial Break-Even

The point at which total revenues and total expenses are equal, leading to a net income of zero.